Canada’s largest telecom company is crying foul over Ottawa’s announcement that it will set aside 60 per cent of the airwaves in a new public auction for small wireless players in another attempt to jump-start a fourth national carrier.

Federal Industry Minister James Moore revealed Monday the federal government will expedite a sale of prime spectrum licences with rules designed to motivate an investor to buy and combine smaller, struggling firms such as Mobilicity and Wind Mobile.

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BCE Inc. on Monday criticized Ottawa’s decision to funnel public airwaves to some companies without allowing all carriers to bid.

“Spectrum is a valuable national resource and shouldn’t be given to selected companies at a bargain. It’s a cost to taxpayers,” said Mark Langton, a spokesman for BCE. (BCE owns 15 per cent of The Globe and Mail.) “Bell has always asked for a level playing field in Canadian wireless. We welcome competition, but all competitors new or old should follow the same rules.”

Mr. Moore said it would irresponsible not to use spectrum auctions to foster competition. “We could back out of the way and allow one or two or maybe three large carriers to consume all of that spectrum and deny consumers more choice, but we’re not going to do that.”

The two other major players, Telus Corp. and Rogers Communications Inc., did not comment on the new auction Monday.

A Rogers spokeswoman said the company is reviewing the announcement and looking forward to consulting with Ottawa on the process this summer.

The auction, planned for early 2015, will reserve a major chunk of AWS-3 frequencies in each region of the country for bidding only by small players that are currently operating in that area – the largest percentage of commercial mobile spectrum airwaves ever set aside for minor carriers in Canada.

Because few bidders will be able to compete for this 30 Mhz of set-aside spectrum, it will be sold at bargain prices. This will make it very valuable for whomever owns Wind Mobile and Mobilicity at the time of the auction because these small carriers are already operating in key urban and suburban markets across Canada and will be positioned to buy these airwaves.

Ottawa is also laying down strict rules that would forbid the spectrum bought by small players from being flipped to major incumbents at a later date.

The federal government has all but rolled out the red carpet for a new fourth player – a strong rival to Bell, Rogers and Telus – but a viable competitor has yet to emerge.

Quebecor Inc. might play that role, but it has signalled it wants a sweeter deal on rates charged for customers roaming on rivals’ networks and a decision on this won’t likely emerge from the Canadian Radio-television and Telecommunications Commission until well into 2015 – past the date of this AWS-3 auction.

Mr. Moore said he’s very confident investors will emerge to buy the set-aside spectrum but declined to elaborate.

“Where there are assertive, competitive fourth players who are providing services to consumers, you see a better mix of services. You see more choice, and you see lower prices,” he said. “I think all Canadians benefit from that kind of market dynamic, and us reserving spectrum to allow that to play itself out, and how it presents itself in the marketplace is not for me to speculate.”

Tony Lacavera, CEO of Wind Mobile, said the announcement was good news for competition and, although Wind was not able to secure financial backing to bid in the most recent auction, he is “cautiously optimistic” his company will take part in the AWS-3 auction. He emphasized the auction will give new entrants more access to spectrum, but acknowledged the structure of the rules could result in consolidation of the new entrants.

Representatives for Mobilicity and Quebecor said Monday morning that they were analyzing the announcement and had no immediate comment.

Some industry watchers say Ottawa’s move increases the chances of new entrants consolidating to form a stronger fourth carrier.

“In its quest to see a fourth national wireless carrier finally emerge – potentially cobbled together, by default among existing new entrants – the government is obviously exploring new ways to offer incentives to new entrants,” Adam Shine, managing director of equity research at National Bank Financial, wrote in a note to clients Monday.

Jeff Fan, telecom analyst for Scotia Capital Inc., wrote he believes Quebecor could be open to “taking a non-controlling position in the fourth operator with a path to control,” noting that such a structure would reduce the risk for the company and preserve some power on its balance sheet.

Dvai Ghose, head of research at Canaccord Genuity, was more skeptical about the prospects for the government’s strategy, noting that without a resolution on wholesale roaming rates, Quebecor would find it difficult to make decisions on bidding for Wind or Mobilicity or how much it should spend in the AWS-3 auction.

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